menu

INCOTERMS®2010

INCOTERMS (International Commercial Terms) have been published by the International Chamber of Commerce in Paris since 1936. There have been several amendments and supplements introduced along the years (1953, 1967, 1976, 1980, 1990, 2000). The last version has come into effect on 1 January 2011.
Incoterms has been amended due to:
  • replacing paper documents by their electronic version,
  • introducing new responsibilities in order to protect cargo and delivery chains,
  • making revisions to the US Uniform Commercial Code (UCC) in 2004,
  • introducing the revised Institute Insurance Clauses in 2009,
  • development of containerisation.

The INCOTERMS®2010 rules have been recognised by the UNICITRAL as the global standard for the interpretation of the international trade rules.

INCOTERMS®2010 facilitate concluding contracts and allow to avoid misunderstandings derived from different interpretation of the same issues. The INCOTERMS®2010 rules define the terms of mutual responsibilities between the seller and the buyer but they do not refer to contracts with carriage and forwarding agents. Good command of transport regulations is, however, indispensable for forwarding agents in order to organise transport, deal with the possible claims, evaluate customs clearance value of the cargo, etc. Moreover, INCOTERMS®2010 do not state contract violation consequences or specify special circumstances when the liability of the party involved might be released. These matters should be settled according to adequate clauses of the commercial contractor optionally by the reference to the proper regulations. INCOTERMS®2010 are applicable to international trade as well as to a domestic.

In the INCOTERMS®2010 rules special attention is paid to applying the standardized terminology consequently to all transport formulas. The unwanted effect of using the different expressions to describe the same meanings is, therefore, avoided.

Basic terms are as follows:

  • Carrier – the party with whom the carriage contract is concluded.
  • Customs Formalities – requirements referring to customs regulations including documentation, security, information and physical inspection responsibilities.
  • Delivery – indication where the risk of the cargo damage or loss is transferred from the seller to the buyer.
  • Delivery document – a document which confirms that the delivery has been accomplished; it is usually the transport document, which can serve also as a payment reference.
  • Electronic record or procedure – the equivalent of paper document.
  • Packaging – meeting the requirements of the selling contract and adjusted to the mode of transport; The INCOTERMS®2010 rules do not regulate the stowage of the cargo within the containers, this matter, therefore, should be clearly explained in the contract.

The basic principles of the INCOTERMS®2010 rules application are as follows:

  • employing particular formulas depends on the will of the contract parties and should be stipulated in the contract;
  • contract terms take priority over INCOTERMS®2010;
  • there is a possibility of introducing changes to INCOTERMS®2010 resulting from the branch characteristics, customs, port regulations or special needs of the parties concluding the contract;
  • INCOTERMS®2010 is to be applied exclusively to the sale contract, that is it refers to the mutual relations between the seller and the buyer and no other parties, nevertheless the implementation of the particular contract involves concluding different contracts including carriage contract;
  • specifying the place and port as precise as possible – this is the reason why the word “insert” ( not used before) has been included in the formula.
  • in the regulations referring to the sea freight the word “ship's rail” has been omitted, in the INCOTERMS®2010 rules the cargo is considered delivered when it is “on board” of the ship.
  • the seller pays for the packaging except the customary accepted deliveries without packaging;
  • the INCOTERMS®2010 rules include loco (Lt. place) and franco (It. journey) formulas. EXW formula is loco and the other formulas are franco.

The INCOTERMS®2010 rules include the interpertetation of 11 trade formulas divided into two categories:

  1. for any mode or modes of transport
  2. for sea and inland waterway transport

Each formula is marked with three-letter trade term (initial letters of their English names). Formulas are listed in each group according to the criterion of the increasing responsibilities and risks of the seller (from EXW to DDP and from FAS to CIF). In each formula the responsibilities of the seller and buyer are listed in ten corresponding points. The responsibilities of the seller are numbered A1-A10 and those of the buyer B1-B10. Below there is a summery of the basic responisibilities and risks division.

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW (insert named place of delivery) Incoterms®2010
EX WORKS - the seller places the goods at the buyer's disposal at the seller's premisses where the risk of the cargo loss or damage is transferred from the seller to the buyer; the seller's duty is to deliver the commercial invoice but not the transport document; the seller is responsible neither for customs clearance nor for organizing the transport and loading the goods on any vehicle.

FCA (insert named place of delivery) Incoterms®2010
FREE CARRIER - the seller delivers the goods on the specified date and to the carrier or any other person appointed by the buyer:

  1. at the seller's premisses loading the cargo on the mode of transport;
  2. at the specified place where he sends the loaded mode of transport – the unloading of which is the buyer's responsibility.
The seller clears the goods for export and carries out other export formalities as well as he delivers the commercial invoice and delivery document; the buyer takes over all risks of cargo damage or loss at the place at the nominated by himself place of delivery, he also concludes carriage contract, obtains import licence and carries out all import or transit formalities.

 

CPT (insert named place of destination) Incoterms®2010
CARRIAGE PAID TO – the seller pays for the carriage of the goods to the place of destination along with loading and unloading costs if it is so contracted in the carriage contract; if any other (not contracted) costs appear they are to be borne by the buyer; the seller fulfils his responsibilities when he delivers the goods to the carrier (if there are many carriers then to the first carrier), the seller arranges customs clearance for export and the buyer arranges customs clearance for import or transit.

CIP (insert named place of destination) Incoterms®2010
CARRIAGE AND INSURANCE PAID TO – the responsibilities are divided between the seller and the buyer the same as in CPT apart from the cost of insurance which is to be borne by the seller.

DAT (insert named terminal at port or place of destination) Incoterms®2010
DELIVERED AT TERMINAL – the seller delivers and unloads the goods in the nominated terminal or place of destination; the seller arranges customs clearance for export and transit; the buyer arranges import customs clearance, pays customs duty and tax and other import costs; all risks of cargo damage or loss are transferred to the buyer at the place of destination;

DAP (insert named place of destination) Incoterms®2010
DELIVERED AT PLACE – the seller concludes the carriage contract to the nominated place and pays the carriage cost, he bears the responsibility for cargo damage or loss and also arranges customs clearance for export and transit; the buyer is responsible for the unloading of the goods as well as for the import customs clearance and its costs.

DDP (insert named place of destination) Incoterms®2010
DELIVERED DUTY PAID – the seller delivers the goods to the nominated place of destination, arranges the export and import customs clearance, pays duty and tax (including VAT) obtains all the necessary licences and official authorisations; the buyer pays for the unloading of the goods in the place of destination (unless it is stated differently in the carriage contract); all risks of cargo damage or loss is transferred from the seller to the buyer at the place of destination.

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS (insert named port of shipment) Incoterms®2010
FREE ALONGSIDE SHIP – the seller delivers the goods alongside ship at the nominated port of shipment and bears the responsibility of cargo damage or loss up to this point, he arranges customs clearance for export; the buyer concludes the ocean carriage contract notifying the seller about the name of the ship, point of loading and the date of delivery of goods to the named port; the buyer is also responsible for the import customs clearance.

FOB (insert named port of shipment) Incoterms®2010
FREE ON BOARD – the seller delivers the goods on the ship in the nominated port of loading and bears the responsibility up to this point, he also arranges the customs clearance for export; the buyer concludes the ocean carriage contract notifying the seller about the name of the ship, point of loading and the date of delivery of goods to the named port; the buyer is also responsible for the import customs clearance.

CFR (insert named port of destination) Incoterms®2010
COST AND FREIGHT – the seller delivers the goods on the ship in the port of loading, at his own expense he concludes the ocean carriage contract to the nominated port of destination and also customs clears the cargo for export; all risks of loss of or damage to the goods is transferred from the seller to the buyer after the goods have been loaded on the ship; the buyer pays the unloading charges at the port of destination and arranges import customs clearance.

CIF (insert named port of destination) Incoterms®2010
COST, INSURANCE AND FREIGHT - the seller delivers the goods on the ship at the port of loading, at his own expense he contracts the ocean carriage of the goods to the nominated port of destination and custom clear the goods for export; the seller buys the insurance of goods and hands over insurance certificate to the buyer; all risks of loss of or damage to the goods is transferred from the seller to the buyer after the goods have been loaded on the ship; the buyer bears the costs of the unloading of the cargo at the port of destination and import customs clearance.

The schematic model of costs distribution between the seller (S) and the buyer (B) according to the INCOTERMS®2010 formulas.

Costs

EXW

FCA

CPT 

CIP 

DAT 

DAP

DDP

FAS 

FOB

CFR

CIF

Packging

S

S

S

S

S

S

S

S

S

S

S

Checking operations

S

S

S

S

S

S

S

S

S

S

S

Loading at the seller's premisses

K

S

S

S

S

S

S

S

S

S

S

Transport to the terminal/port

K

S

S

S

S

S

S

S

S

S

S

Export licence

K

S

S

S

S

S

S

S

S

S

S

Customs clearance for export

K

S

S

S

S

S

S

S

S

S

S

The main carriage

K

K

S

S

S

S

S

K

K

S

S

Import licence

K

K

K

K

K

K

S

K

K

K

K

Customs clearance for import

K

K

K

K

K

K

S

K

K

K

K

Transport to the buyer's premisses

K

K

S

S

K

S

S

K

K

K

K

Unloading at the buyer's premisses

K

K

K

K

K

K

K

K

K

K

K

Insurance

-

-

-

S

-

-

-

-

-

-

S

 

The above presentation is only schematic and serves as a model to give a general view. It does not show the complexity of the formulas, for example: in FCA rule the goods might be taken over in the seller's warehouse or they might be transported by the seller to the agreed terminal; in CPT, CIP, DAP and DDP formulas the goods might be transported by the seller to the place of destination.

Insurance
The seller insures the goods at his own expense only in CIP and CIF formulas (the letter I stands for Insurance). The buyer in these cases is the insured entity. The insurance contract should be concluded with the insurance company with a good reputation. The guarantee sum should equal to 110% of the goods value in the currency stated in the sale contract and cover min. of risks according to the insurance Institute Cargo Clauses (LMA/IUA)(C). On the buyer's demand and at his expense the seller should broaden the scope of insurance and insure the goods according to the Institute Cargo Clauses (A), (B), Institute Strike Clauses or Institute War Clauses.

Customs Clearance
The customs clearance duty includes fulfiling the all requirements stated in the Customs Code along with providing specified documentation and information, presenting the goods for revision and paying its costs as well as all incurring other charges such as duty and tax. The duty of customs clearance is carried out by the party having its domicile in the country where the goods are cleared (with the exception of EXW and DDP). In transit the goods are cleared in the place of delivery.

Security
Since the terrorist attracts in the USA, the exporters and importers have been obliged to provide the relevant authorities with the information about the cargo in order to maintain security in the movement of goods. The amendments of the Community Customs Code have been made and the customs authorities demand detailed information before loading the goods on the ship in the port of loading. In the INCOTERMS®2010 rules the obligations in this matter are allocated between the seller and the buyer by analogy to other obligations.

Incoterms as price formulas
Incoterms formulas are also the formulas of the price because they divide the costs and risks between the seller and the buyer. Therefore, it is not only used the term - the sale on the EXW conditions but also the term – the price on EXW conditions. Basicly, the price rises according to the formulas order in the group of 7 rules for any transport and in the group of 4 rules for sea and inland waterway transport. If there is a need to calculate the price differently, it should be clearly stated in the sale contract.

The right of carrier choice.
Considering the right of the carrier choice, the Incoterms are divided into two groups:

  1. EXW, FCA, FAS, FOB – the buyer has the right and obligation to organise the transport;
  2. CPT, CIP, CFR, CIF, DAT, DAP, DDP - the seller has the right and obligation to organise the transport.

 

Charter
Taking forwarding or trade into consideration, charter contracts for voyage are mostly concluded. In FCA and FOB formulas the buyer is responsible for the charter whereas in CFR and CIF - the seller.
The following abbreviations are commonly used to describe what includes the freight price:

  • LILO – liner in/liner out – freight price includes loading and unloading charges;
  • LIFO – liner in/free out – freight price includes loading charges;
  • FILO – free in/liner out – freight price includes unloading charges;
  • FIFO – free in/free out – freight price does not include loading and unloading charges.

Transport formulas variations are applicable when formulas do not comply adequately with the trade characteristics and port, customs, shipping etc. regulations. The particular formula is adjusted by broadening the scope of the seller's responsibilities. Mostly in the case of EXW formula the variation refers to loading the goods on the vehicle or customs clearance, and in the case of CIF/CIP - to additional insurance. In order to avoid any ambiguity, it is suggested to add additional information after referring to a particular formula, for example: EXW Warsaw INCOTERMS®2010 loaded.

Other examples of the transport formulas variations:

  • EXW loaded - the seller is obliged to load the cargo on a transport facility in the named place;
  • EXW cleared - according to EXW formula the buyer is responsible for export customs clearance of the cargo; the term cleared indicates that this responsibility devolves from the buyer on the seller; it results from the fact that the buyer might have some formal difficulties with export customs clearance in the seller's country;
  • FOB stowed - the definition of delivery according to the oldest transport formula FOB is not precise - it refers to the delivery of the cargo on the ship according to the rules typical for the particular port; the expression stowed or stowed I/s/d means that the seller is obliged to incur all the port charges including stowage and lashing costs; this formula is usually applicable when the buyer arranges sea freight according to free in rule which means these costs are not included in the sea freight charge;
  • CFR/CIF landed - the seller, in comparison to CFR and CIF formulas, incurs the cost of cargo discharging from the ship in the port of destination.

Informacja o przetwarzaniu danych osobowych w Terramar Sp. z o.o.

Szanowni Państwo,
				
Od dnia 25 maja 2018 roku zacznie obowiązywać nowe Rozporządzenie Parlamentu Europejskiego i Rady (UE) 2016/679 z dnia 27 kwietnia 2016 roku w sprawie ochrony osób fizycznych w związku z przetwarzaniem danych osobowych i w sprawie swobodnego przepływu takich danych oraz uchylenia dyrektywy 95/46/WE (RODO).
Terramar Spedycja Międzynarodowa Sp. z o.o. realizując obowiązek informacyjny, zgodnie z art.13 ust.1 i ust.2 ogólnego rozporządzenia o ochronie danych osobowych informuje, że:

1.	Administratorem Państwa danych osobowych jest Terramar Spedycja Międzynarodowa Sp. z o.o. z siedzibą w Gdyni przy ul. Rotterdamskiej 3;
2.	Dbamy o to, aby dane te były odpowiednio zabezpieczane, a ich przetwarzanie było jasne, rzetelne i zgodne z przepisami. Zapewniamy Państwa, że w swoim postępowaniu kierujemy się przepisami prawa regulującymi zasady ochrony danych osobowych.
3.	Inspektor Ochrony Danych Osobowych w Terramar Spedycja Międzynarodowa Sp. z o.o. został wyznaczony i można się z nim kontaktować pocztą e-mail pod adresem rodo@terramar.pl;
4.	Państwa dane osobowe przetwarzane będą w celu realizacji zawartej umowy bądź zleconych nam czynności w zakresie spedycji, magazynowania czy odpraw celnych;
5.	Dane nie będą udostępniane podmiotom innym niż uprawnione na mocy przepisów prawa;
6.	Państwa dane osobowe nie będą przekazywane do państwa trzeciego / organizacji międzynarodowej;
7.	Państwa dane osobowe będą przechowywane do czasu realizacji umowy / zlecenia i okresu przedawnienia roszczeń;
8.	Posiadają Państwo prawo dostępu do treści swoich danych osobowych oraz prawo do ich sprostowania;
9.	Ma Pani / Pan prawo wniesienia skargi do organu nadzorczego Prezesa UODO gdy uzna Pani / Pan, iż przetwarzanie danych osobowych Pani / Pana narusza przepisy ogólnego rozporządzenie o ochronie danych osobowych z dnia 27 kwietnia 2016 roku;
10.	Podanie przez Panią / Pana danych osobowych jest warunkiem zawarcia umowy / przyjęcia zlecenia do realizacji.